Can't believe I am asking this (deposit, exchange, equity)

[cluecu]

At the risk of sounding incredibly stupid I'm a bit confused. Hoping someone can help me as the research I'm doing online is not helping!

Our (DH and my) situation is:

Bought our 1st house around 7 years ago as first time buyers.
Would now like to buy a larger and more expensive house
Have around 60k left on the mortgage and similar properties in the area are selling for around 130k.

So, in my mind I was thinking budget up to around 240k. Assuming we had an offer accepted etc (and a buyer for ours at 130k leaving 70k owing to bank) I thought we be applying for mortgage of 180k and the 60k equity in our 1st house would be the deposit.

However, I am now realising we'd need to all be stumping up an exchange deposit we'll before this. So, assuming the financials were as above, we'd need to find an extra 11k in cash for the seller of next house in addition to the 13k our buyer would deposit to us.

This is achievable as we have savings however am I the only person that thought the equity in current was the deposit?

Also, when we receive the rest offunds from our sale, we probably couldn't pay it straight against the new mortgage in case of fees for paying too much, so do people just put that in an account?

I feel silly here but all my friends are ft buyers too so I don't know anyone who has recently bought and sold at same time

We've bought and sold a couple of times. Both times the house we were buying agreed, at the point of exchange, to accept whatever amount we were getting from our buyers as a deposit rather than the full 10%.

This is with the understanding that should the sale then fail to complete, we would still be liable for the full 10% and then we would have to find the cash to make it up to 10%.

Thank you all I really appreciate the help. I did also google lots of old mumsnet threads on this (I feel like you just get a better set of experience and explanation on this site) but wanted recent advice and I feel a lot happier now

I'm really confused by this. We are planning to downsize soon and won't have cash for an exchange deposit at ten percent of the house we plan to buy, we won't be getting a mortgage and will need to use the equity from our sale as a deposit (we will need about £100,000 deposit and won't have that in cash). Does this mean we'd have to sell and rent for a while first?

@pinkprosseco

I'm really confused by this. We are planning to downsize soon and won't have cash for an exchange deposit at ten percent of the house we plan to buy, we won't be getting a mortgage and will need to use the equity from our sale as a deposit (we will need about £100,000 deposit and won't have that in cash). Does this mean we'd have to sell and rent for a while first?

No. OP is completely mistaken. Your deposit will be passed from your sale.

We didn’t put money in to our deposit last time we moved. Our buyers at the bottom of the chain did but we didn’t. Our house was viewed as collateral I guess. The time before we did have to send money over but that was because the equity in our flat was less than the mortgage deposit on the new house. So I guess it depends how much equity you have relative to the new house. For our last move we pulled some equity out of our sale for renovations so we had money from the solicitor upon completion.

That's why people can't afford to move , they have no free money to pay all the fees aside from the actual increase in mortgage !

@DinoHat thank you